Showing posts with label FOMC. Show all posts
Showing posts with label FOMC. Show all posts
Tuesday, March 16, 2010
FOMC today
The market hasn't been doing much since about 7:15AM EST, no doubt because of FOMC later today. Nobody seriously expects any change in interest rates but the statement will be scrutinized for hints that interest rates may increase in the future. In any case, don't expect a lot of movement until after it's over.
Wednesday, January 27, 2010
Narrowing price action
Ranges are getting quite small which is not unusual in advance of the FOMC interest rate decision. I can’t believe anyone really thinks the US will raise interest rates. My oh my, wouldn’t that cause some action if they did?
Friday, September 25, 2009
Is it really Friday?
First, a word cloud based on the text of the FOMC minutes from Wednesday. I hope you had a chance to read the lighthearted take on the minutes I posted a couple of posts ago. This word cloud tells me that their most frequently used words are federal, committee, economic, and markets. Why am I not surprised?
I’m still in the AUD/USD (currently at 78 pips) and USD/CHF (currently at 38 pips) trades from yesterday. The USD/JPY trade stopped out at 20 pips profit. GBP/JPY stopped out at a 40 pip loss and I’m currently short in this pair with my stop at breakeven. Since the AUD/USD and USD/CHF both have stops at a profit point and the GBP/JPY is at breakeven they are “free” trades. Traders love those things because once the stop is at or above breakeven you can't lose money or are profitable. But I’m in these trades thinking bigger things could happen. Whether they will or not is the question.
Today began looking like one of those days when the USD could continue to strengthen. Why? Equity futures are bidding down. Plus there’s lots of buzz and chatter out there about how the equity markets have seen their highs and a turning point is here. Of course some of those buzzing have been saying this for at least six weeks or so, some longer. Much in the area of market prediction is downright silly. That said, I do believe the market provides clues and markers for those alert to them. Seeing them requires awareness, something I’ll write about this weekend.
Ten days ago I did an Elliott wave count on the EUR/USD. I’ve updated it in the daily chart below. The trouble with Elliott Wave is that when you’re in a correction it’s difficult to reach agreement on what it is until after the fact. This makes it less than tradable in most cases. But I do believe it reflects a market psychology. I still believe we’re in wave C of a correction on the daily chart. Once the Euro reached past 1.4720 I put a sell order in at 1.4849. My thinking was that it would reach towards its September ’08 high of 1.4868. It climbed only to 1.4845 so it didn’t quite reach the order. Frankly, I’m a bit surprised. A sell order I put in place this morning at 1.4712 was just triggered. I’ll move my stop to breakeven (if possible—it can reverse quickly but it’s a tight stop so I won’t pay too stiff a price) as soon as it looks as though it’s going to continue down. I won’t be troubled if I’m taken out since there may be one last push up. In any case, the pair is looking a bit top heavy.
Today began looking like one of those days when the USD could continue to strengthen. Why? Equity futures are bidding down. Plus there’s lots of buzz and chatter out there about how the equity markets have seen their highs and a turning point is here. Of course some of those buzzing have been saying this for at least six weeks or so, some longer. Much in the area of market prediction is downright silly. That said, I do believe the market provides clues and markers for those alert to them. Seeing them requires awareness, something I’ll write about this weekend.
Ten days ago I did an Elliott wave count on the EUR/USD. I’ve updated it in the daily chart below. The trouble with Elliott Wave is that when you’re in a correction it’s difficult to reach agreement on what it is until after the fact. This makes it less than tradable in most cases. But I do believe it reflects a market psychology. I still believe we’re in wave C of a correction on the daily chart. Once the Euro reached past 1.4720 I put a sell order in at 1.4849. My thinking was that it would reach towards its September ’08 high of 1.4868. It climbed only to 1.4845 so it didn’t quite reach the order. Frankly, I’m a bit surprised. A sell order I put in place this morning at 1.4712 was just triggered. I’ll move my stop to breakeven (if possible—it can reverse quickly but it’s a tight stop so I won’t pay too stiff a price) as soon as it looks as though it’s going to continue down. I won’t be troubled if I’m taken out since there may be one last push up. In any case, the pair is looking a bit top heavy.
Besides that I went long the pound this morning at 1.5987. I don’t have time to include the chart right now but I have a tight stop on it.
None of the above are trade recommendations. Remember that trading involves substantial risk. My hope is that by posting this analysis on some of the trades I take, people can start to learn an approach for themselves. The biggest part of trading is handling emotions and this is something I'll be dealing with in future posts.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Thursday, September 24, 2009
A lighthearted look at the FOMC 9/23/09 statement
An acquaintance of mine, a currently high, formerly well-placed, government official, was kind enough to provide the following insider insights (his remarks are in the brackets) into the hidden meanings of the FOMC statement released yesterday. Of course I feel compelled to add that his interpretations and words are not necessarily meant to be representative of this blog writer's opinions. Enjoy.
Information received [We like Erin Burnett on CNBC.] since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn [I didn’t hear a cat; I didn’t see a cat . . .What bounce?]. Conditions in financial markets have improved further [The DOW is up and who gives a hoot about volume anyway?], and activity [foreclosures] in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit [Now that the car has run out of gas, its speed seems to have stabilized]. Businesses are still cutting back on fixed investment and staffing, though at a slower pace [Firings have slowed now that there are fewer employees to fire]; they continue to make progress in bringing inventory stocks into better alignment with sales [We are confident that empty shelves will be filled if people ever start buying stuff again]. Although economic activity is likely to remain weak for a time [our lifetime], the Committee anticipates that policy actions [Whatever it is we are doing] to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces [Whatever it is that our friends are doing] will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability [Whatever!].
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued [at least below Carter Administration levels . . . we hope.] for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of tools [We will throw everything we have at it; maybe something will stick.] to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent [maybe 0 percent and some kind of rebate . . . ] and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period [We’ll be lucky to get past Thanksgiving.]. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases [We’re running out of paper.] in order to promote a smooth transition in markets and anticipates that they will be executed [Better them than us.] by the end of the first quarter of 2010. As previously announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be completed by the end of October 2009. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets [As the smoke clears, our worst case scenario is that there will be more smoke]. The Federal Reserve is monitoring the size and composition of its balance sheet [After much discussion, we voted 8 to 2 that size would be 8 ½ X 11 and that the composition would be words and numbers in columns.] and will make adjustments to its credit and liquidity programs as warranted [We don’t know what we mean by this. Hey, what would YOU do?].
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Information received [We like Erin Burnett on CNBC.] since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn [I didn’t hear a cat; I didn’t see a cat . . .What bounce?]. Conditions in financial markets have improved further [The DOW is up and who gives a hoot about volume anyway?], and activity [foreclosures] in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit [Now that the car has run out of gas, its speed seems to have stabilized]. Businesses are still cutting back on fixed investment and staffing, though at a slower pace [Firings have slowed now that there are fewer employees to fire]; they continue to make progress in bringing inventory stocks into better alignment with sales [We are confident that empty shelves will be filled if people ever start buying stuff again]. Although economic activity is likely to remain weak for a time [our lifetime], the Committee anticipates that policy actions [Whatever it is we are doing] to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces [Whatever it is that our friends are doing] will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability [Whatever!].
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued [at least below Carter Administration levels . . . we hope.] for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of tools [We will throw everything we have at it; maybe something will stick.] to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent [maybe 0 percent and some kind of rebate . . . ] and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period [We’ll be lucky to get past Thanksgiving.]. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases [We’re running out of paper.] in order to promote a smooth transition in markets and anticipates that they will be executed [Better them than us.] by the end of the first quarter of 2010. As previously announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be completed by the end of October 2009. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets [As the smoke clears, our worst case scenario is that there will be more smoke]. The Federal Reserve is monitoring the size and composition of its balance sheet [After much discussion, we voted 8 to 2 that size would be 8 ½ X 11 and that the composition would be words and numbers in columns.] and will make adjustments to its credit and liquidity programs as warranted [We don’t know what we mean by this. Hey, what would YOU do?].
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Wednesday, September 23, 2009
Out of the Guppie
Well, finally out of GBP/JPY at 90 pips profit. I have a small long in the AUD/USD but am staying out of trading until after the US rate decision this afternoon. Not that I expect any great news there but the markets are acting a bit squirrelly in my opinion. More to the point is that I'm traveling back to Florida this morning and can't give the trading the attention it deserves.
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